Services Regulation and Finance

Transcription

1 Services Regulation and Finance Marc Maes, CSO Strategy Meeting on Advocacy Around Africa s Trade ad Development Challenges Accra, 2-3 March 2016

2 Financial services (de-)regulation in trade agreements Marc Maes, CSO Strategy Meeting on Advocacy Around Africa s Trade ad Development Challenges Accra, 2-3 March 2016

3 GATS GATS 2000 DDA Services in FTAs TISA CETA TTIP

4 4 Part 1: GATS 1994 First services trade agreement Four modes of services trade Most important: mode 3, investment Market access and national treatment commitments via bottom-up approach Commitments can not be changed without compensation

5 5 GATS 1994 Unfinished business: Domestic regulation: disciplines qualifications, procedures, technical standards, licensing requirements Rules: subsidies, gvt procurement, safeguards LDC modalities Financial services negotiations continued until 1997 with 104 countries taking commitments (into force in 1999) Built-in agenda of negotiations: GATS 2000

6 6 GATS 1994 on financial services Market Access and National Treatment commitments on financial services in schedules Annex on Financial Services Understanding on Financial Services appended to Final Act of Uruguay Round

7 7 GATS 1994 on financial services Market Access and National Treatment commitments on financial services in schedules No limitations on the number of services providers and quantity or value of services provided No limits on foreign ownership No restrictions on specific types of legal entity Unless specified otherwise in schedules No restrictions on payments and capital movements related to committed (financial) services (except in case of balance of payment problems)

8 8 GATS 1994 on financial services Annex on Financial Services, contains: Scope and definitions Definitions of services in exercise of government authority : central banks, monetary authorities, statutory social security are excluded Prudential carve out: a self-cancelling loophole

9 9 GATS 1994 on financial services Prudential carve out self-cancelling loophole : members can take measures for prudential reasons to ensure protect investors, depositors etc or to protect the integrity and stability of the financial system Where such measures do not conform with the provisions of the Agreement, they shall not be used as a means of avoiding the Member's commitments or obligations under the Agreement

10 10 GATS 1994 on financial services Understanding on Financial Services: Between 33 mostly OECD countries (plus Nigeria and Sri Lanka) Contains enhanced commitments, including: Stand-still (only existing conditions allowed) New services shall be permitted Existing monopolies listed and endeavour to reduce Remove non-discriminatory measures that would hinder foreign financial services Mode IV senior staff connected with investment permitted Actually constitutes a negative lists

11 11 GATS 1994 on financial services Geared towards swift liberalisation, increased competition and concentration Without prove that this will improve access to services in developing countries Increased risk for instability (free movement of capital, payments and providers) No regulation of financial services but reduction of policy space ( regulations are barriers to trade )

12 GATS GATS 2000 DDA Services in FTAs TISA CETA TTIP

13 13 Part 2: Services negotiations in the DDA GATS 1994 : broad built-in agenda, including market access negotiations within 6 years = GATS 2000 GATS 2000 integrated into DDA. In DDA: most developing countries not keen on engaging without progress on development issues, NAMA and Agriculture DDA stalled

14 14 Services negotiations in the DDA Market access and national treatment Domestic regulation Rules LDC modalities

15 15 Services negotiations in the DDA Market access and national treatment Request Offer process, did not pick up Attempts to break the bottom-up approach Annex B in Hong Kong: all to commit in 80% of sectors ; failed, but collective requests allowed Chair s text May 2008: bind existing openness, no prior exclusion of sector or mode

16 16 Services negotiations in the DDA EU tabled 107 requests! (all leaked out) Financial services, one of 5 key sectors: 94 requests on financial services, including 20 LDCs and 30 LICs Some requests in financial services: Increase foreign ownership Remove licences for branches Remove state monopoly on reinsurance

17 17 Services negotiations in the DDA Some EU requests: Allow foreign companies to provide financial services to state agencies Allow foreign bans to have offshore banking licences Remove requirement that money reserve must be held in branch Allow trade in derivative products Remove requirement of mandatory lending to SMEs

18 18 Services negotiations in the DDA Collective or plurilateral request on financial services by 10 countries : Bind all existing liberalisations Market opening in Mode 3 in all financial services Remove all foreign ownership restrictions

19 19 Services negotiations in the DDA Domestic regulation = rules for the administration of licenses, qualifications and technical standards = all financial services regulation To make sure they: do not constitute unnecessary barriers to trade in services are not more burdensome than necessary are based on objective and transparent criteria = necessity test : authorities must prove that regulation do not interfere with free trade more than necessary

20 20 Services negotiations in the DDA Domestic Regulation Is also about transparency : Governements must publish proposals for new measures in advance And allow opportunity for interested persons to comment => allow for lobby

21 GATS GATS 2000 DDA Services in FTAs TISA CETA TTIP

22 22 Part 3: going with the willing, financial services in FTA s The DDA stalling, US and EU step up FTA negotiations Financial services in EU FTA s, so far in: Cariforum EPA EU-Korea EU-Central America EU-Colombia/Peru/Ecuador EU-Singapore EU-Canada

23 23 Part 3: financial services in EU FTAs Main priority: access in Mode 3 Covering virtually all financial sectors; locking in existing liberalisations + additional Uses Gats Understanding as minimum (stand still, any new services, monopolies, non-discriminatory measures)

24 24 Part 3: financial services in EU FTAs Adds advance notice, comment and response Encouraging application of international standards nothing requires privatisation Prudential carve-out without loophole But with no arbitrary discrimination and not more burdensome then necessary (necessity test)

25 GATS GATS 2000 DDA Services in FTAs TISA CETA TTIP

26 26 Part 4: TISA Now enter the Really Good Friends Australia, Canada, Chile, Chinese Taipei, Colombia, Costa Rica, European Union, Hong Kong, Iceland, Israel, Japan, Korea, Liechtenstein, Mauritius, Mexico, New Zealand, Norway, Pakistan, Panama, Peru, Switzerland, Turkey, United States RFG = 23 including EU (or 49 countries)

27 27 Enter the Really Good Friends RGF discussing possibility of a plurilateral or international Trade In Services Agreement (TISA)since beginning of 2012 Agreement on principles governing the TISA reached at the end of 2012 Negotiations have been launched without much publicity in March 2013 (or even earlier) EU Commission obtained mandate on 18 March (only five weeks after proposing it on 15 February)

28 28 TISA = a radical services FTA Based on GATS, art.v = same base as for services in FTAs Positive list for market access, negative for national treatment Standstill and ratchet Enhanced disciplines on domestic regulation and rules (subsidies, government procurement) TISA may include investor-state-dispute settlement! (USA seems to be interested in that, EU is not)

29 29 TISA expansion Objective remains to get global services liberalisation and disciplines = 1) get countries on board of TISA and/or 2) radicalise GATS negotiations => 1) RGF will push other countries to come on board Countries that have or are negotiating FTAs with RFG WTO accession countries

30 30 TISA expansion => 2) RGF want to bring TISA back into WTO Or by getting it recognised as a WTO plurilateral (unlikely) Or by bringing TISA result into GATS negotiations = docking (problem : RGF will need to offer MFN to all WTO members)

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32 32 Financial services in TISA Enhanced Markets Access List of financial services sub-sectors where commitments have to be made List and end monopoly rights Accept any new service Rules Governement procurement : MFN +NT (with schedules) Subsidies: NT (with schedules)

33 33 Financial services in TISA Domestic Regulations Non-discriminatory measures may not hinder financial services trade All measures must be administerd in a reasonable, objective, impartial way Inform, comment, respond Disciplines for insurance by Postal Insurance Entities Disciplines on sectorial cooperatives selling insurances (US proposal)

34 GATS GATS 2000 DDA Services in FTAs TISA CETA TTIP

35 35 Part 5: CETA (EU-Canada FTA) Negotiations concluded in 2014 This Monday (29 Feb 2016) legal scrubbing finished CETA uses completely negative list (for both MA and NT); risk of errors is high

36 36 Part 5: CETA Contains Investment-state dispute settlement (ISDS) Financial services investors can use ISDS is not treated fair and equitable = can enforce discplines themselves EU forced Canada to give up exclusion of financal services from ISDS

37 37 Part 5: CETA However Prudential carve out without loophole or not more burdensome then necessary But with new wording in an annex ( Guidenance ): No disguished restriction No arbitrary discrimination not so severe in light of its purpose that is manifestly disproportionate to attain purpose

38 38 Part 5: CETA Party may require registration, may prohibit particular service or activity Party may determine its own appropriate level of prudential regulation In case of ISDS, Parties can agree that a contested measure was prudential and this is binding on the Tribunal (= filter)

39 GATS GATS 2000 DDA Services in FTAs TISA CETA TTIP

40 40 Part 6: TTIP (a MRTA ) Will also contain ISDS Will go for regulatory cooperation to resolve divergent services rules and jointly work out new harmonised rules EU also want branches to be monitored by home not host state (US rules are more strict)

41 41 Part 6: TTIP (a MRTA ) US wanted to subject dealings of foreign banks with US banks outside the US to US rules EU and US banks and EU against that (Compulsary) Regulatory cooperation should forestall such measures (and there are many more examples)

42 42